Davies opens the floor for input on special economic zones

The draft Special Economic Zones Bill—which aims to improve the concept of industrial development zones—is open for public comment, Trade and Industry Minister Rob Davies said on Monday.

“The special economic zones (SEZ) programme is one of the most critical instruments that can be used to advance government’s strategic objectives of industrialisation, regional development and job creation,” Davies told reporters in Pretoria.

The Bill aimed to improve on the industrial development zones (IDZ) programme introduced in 2000. The programme led to the establishment of four zones—Coega outside Port Elizabeth, East London, Richard’s Bay, and OR Tambo International Airport, which was not yet operational.

A 2007 review found a number of problems with the IDZs.
Davies said these included a design structure that favoured only a few regions, ad hoc planning, inadequate coordination between government agencies and inadequate financing arrangements which made long-term planning tricky.

“The special economic zones policy and Bill were motivated by the need to urgently address [these] challenges within the broader framework of accelerating industrial development, economic growth and job creation,” Davies said.

The SEZ policy would allow for the designation of different types of economic zones. At the moment, the IDZs were export-oriented and therefore found near ports and airports.

However, SEZs would not necessarily have to be export oriented and could be based anywhere. Davies said SEZs allowed for a broader range of activities, such as science and technology parks. It was hoped the SEZs would attract foreign direct investment and decentralise some industrial activity to less developed, marginalised areas of the country.

Consultation
Davies said the trade and industry department would start the public consultation process immediately.

“In addition, we will immediately start engaging provinces on identifying possible SEZs and undertaking the required feasibility studies for each proposed SEZ.”

Davies said the Free State, North West and Limpopo had already identified possible SEZs in industries including agro-processing, light manufacturing and beneficiation.

However, at the moment there was no model in place, or processes, for the government to support this. The proposed legislation provided the process by which these could be recognised and designated, if feasible, he said.

To resolve the ad hoc financing problem, the Bill proposed setting up an SEZ fund which would offer more predictable funding to enable long-term planning.

The Bill sought to set out more clearly an approach to governance and planning for economic development zones, Davies said. It also aimed to cut red tape.

The Bill provides for a SEZ board to advise the minister. The existing IDZs would be catered for under the new legislation.

Relieve pressure
Department director general, Lionel October, said the proposed industrial development zone in Saldanha Bay was a good example of how the new model, proposed by the Bill, would work.

“Saldanha ... is what we’re looking at in terms of the new model.”

The three tiers of government—local, provincial and national—had worked together on developing Saldanha as an IDZ, October said.

The feasibility study for the proposed IDZ in Saldanha Bay would be submitted by June this year. The IDZ would include a multi-port facility to relieve pressure on the port of Cape Town.

Since its inception, the IDZ programme had attracted 40 investors who contributed over R11.8-billion. It had created 33 000 jobs.

“Despite these achievements, it was felt that more could have been achieved,” Davies said.

He said his department intended tabling the Bill this year and have it passed by Parliament by the end of the year.—Sapa